Wage Inequality among Ethnic Groups in United States in the 1990s: A Regression Analysis Using NLSY79 Dataset

Abstract

Based on the wage gap between white and black men in the United States in the early 1990s, this study uses ordinary least squares (OLS) regression analysis to explore the effects of factors such as race, education, work experience, and cognitive test scores on wages. Research shows that black-white differences in education, work experience, and abilities account for about 72% of the black-white log wage gap. The interaction term analysis revealed that, while the difference in log wage growth between the two racial groups resulting from more experience was not statistically significant, black men continued to lag behind white men in obtaining high-paying jobs despite having equivalent educational attainment, suggesting that educational advancements alone were insufficient to close the racial wage gap. Reducing the pay gap not only promotes social fairness and aids in future economic growth, but it also helps to reduce poverty and increase economic efficiency, which is why this research is important. A 1979 National Longitudinal Survey of Youth subsample served as the primary source of data. The results support the creation of the policies required to close the pay gap and offer broad perspectives on the examination of racial wage disparity.